Cereal prices in the Middle East are mediated through state subsidies. So far, the urban poor have not been exposed directly to the rise in prices. It seems inevitable, however, that at some point the price rises will be passed on to the public through subsidy cuts, either in 2008 or in 2009, in countries such as Egypt, Morocco, Tunisia, Iraq, and Jordan. Subsidy cuts will, without doubt, result in immediate riots. The urban poor will not wait until they reach a starving point: they will act immediately, as they have done before, against what they will see as the government betraying its fundamental duty to provide affordable food prices.
Egypt and Morocco are among the US?s closest allies in the region. Belonging to the so-called ?moderate Arab/Muslim countries?, they have been the most accommodating in terms of supplying the US with intelligence and military cooperation against Islamist groups. In return the US has supported these regimes militarily and economically, through direct support (Egypt) or Free Trade Agreements. Political instability in these countries will put in serious risk the position of the US in the Middle East. The notion that food prices have gone up because of American (and other developed countries?) use of biofuels will not make the US more popular among people in the region.
The American policy on biofuels is repeatedly presented as a means to improve US national security, by reducing dependency on imported oil from the Middle East. Articles on Ethanol production here in the Oil Drum (by Robert Rapier and others) have shown this to be a fiction at best, because of ethanol?s poor EROI. Now it becomes clear that the subsidising of biofuels will make the world less safe for the US, by destabilising ?friendly regimes? in the Middle East and beyond.
A few more words. Egypt, Morocco and other Middle East countries are regularly covered by Western Media, because of their economic and geo-political importance, as well as their proximity to Europe. Other countries ? for example in sub-Saharan Africa ? may be even more vulnerable, as many of them depend on cereal imports (although perhaps not to the same extent). It would seem likely that governments in sub-Saharan Africa have less power to mitigate price rises through generous subsidies. However, many such countries are off the radar for Western media, and the developed world will learn about the problems only through news of famines or refugee crises.
To forecast the impact of cereal price rises, one should take into account food subsidies (where they exist) and the ability of governments to sustain them. In the Middle East, it seems, the political consequences will be almost immediate, and will come before actual food shortages. In other regions it may take a different course. In Mexico, for example, subsidies have been eliminated long ago. But as I am no expert on Mexico, I will leave this for others.
If this short article dealt with the problem in strategic terms, in grand summaries of numbers (population, oil, food), it is important to remember that behind all these are people, real people, and many of them. Poor families in Egypt and Morocco, for whom life is already very difficult, and who survive on the bare minimum, are going to be badly hit in the next two years, when even a pita bread will become too expensive. The important issue here is not the survival of certain political regimes, but rather the survival of these families.
Here's my solution Alzado & Achmed.....better start encouraging your Muslim buddies in Saudi to start lowering prices or ramping up those pumps, otherwise, you're gonna be eating sand.